MBABANE – MTN Eswatini Limited has filed an urgent application with the High Court of Eswatini seeking to enforce an arbitration award dismissing Eswatini Electricity Company Limited’s claim of over E10 million.
The claim by Eswatini Electricity Company (EEC) for E10 357 985.23 (US$647 600.40) represented the value of electricity credit purchased by MTN Eswatini between 2012 and 2018 but not paid for. MTN disputed this indebtedness.
The arbitrator, South African retired Justice of Appeal Jonathan Heher dismissed EEC’s claim and ordered MTN Eswatini to pay the electricity company E864 648 (US$54 059.39). MTN Eswatini has approached the court to make this arbitration award handed down on December 18, 2022 an order of the court.
Sibusiso Nhleko, Head of Corporate Services at MTN Eswatini, said the application relies on Section 17 of the Arbitration Act 24 of 1904, which allows for an arbitration award to be enforced in the same manner as a judgment or court order.
He informed the court that on January 8, 2021, the parties signed an agreement to resolve the matter via the Arbitration Foundation of South Africa (AFSA) Rules. The arbitration was presided over by Justice Heher.
The arbitrator also issued a costs order requiring EEC to pay the costs of the arbitration incurred after January 29, 2020. The award did stipulate that MTN Eswatini must pay wasted costs occasioned by a postponement on May 12, 2022.
Despite the dismissal of the main claim, according to Nhleko, a new dispute has arisen regarding the taxation of legal costs. Nhleko states that MTN Eswatini prepared a bill of costs to be settled by the Taxing Master. However, he alleges that EEC attempted to frustrate the provisions of the award by insisting that counsel's costs must be certified.
MTN Eswatini argues that the award contains no such limitation or requirement for certification. To resolve the impasse, the parties sought clarification from the arbitrator. Nhleko attests that the arbitrator responded by confirming his intention was clearly recorded in the award, which MTN Eswatini interprets as containing no restriction on the costs awarded.
“There is no ambiguity in the award and restriction whatsoever as argued by Eswatini Electricity Company. It is apparent that Eswatini Electricity Company is trying to frustrate and avoid its obligations in terms of the award,” said Nhleko.
MTN Eswatini, represented by Henwood and Company, contends that the dispute is res judicata (already judged) and that the award is final and binding. The company argues that EEC is attempting to avoid its obligations and that the application to the High Court would not have been necessary had EEC simply complied with the arbitrator's ruling.
The veracity of these allegations is still to be tested by the court and EEC is yet to file answering papers in the event it is opposed to the application.
When the issue came before the arbitrator, it concerned the interpretation of a Memorandum of Agreement (MOA) signed in January 2012. EEC sought payment of E10 357 985.23, which it alleged represented the value of electricity credit purchased by MTN but not paid for between 2012 and 2018.
MTN denied indebtedness for the full amount but admitted that, during the relevant period, it sold tokens aggregating E864 648 in excess of payments made to EEC. MTN tendered this amount in full and final settlement on January 29, 2020, but the tender was rejected by EEC.
The dispute arose from a prepaid electricity solution where MTN acted as a wholesale vendor, managing and selling electricity credit to the public via its Mobile Money platform. The system integrated MTN's Mobile Money platform with EEC's Extended Vending Gateway (EVG) real-time system.
EEC argued that a valid sale was concluded, and payment became due, the moment a valid token was generated and delivered by its EVG system to MTN’s system. MTN countered that under the MOA, its obligation to pay only arose once a consumer successfully purchased a token through the Mobile Money platform. MTN argued that a successful transaction required the consumer to receive the token and for funds to be deducted from their Mobile Money wallet.
A joint technical team investigated the variance between tokens issued by EEC and payments received from MTN. On December 31, 2019, the team produced a report finding a system design problem.
The investigation revealed that the interface system could not differentiate between an initial token request and subsequent retries caused by system timeouts. Consequently, if a request timed out, the Mobile Money system would issue a retry, causing EEC’s system to generate multiple tokens for a single transaction. The technical team concluded it was technically impossible to determine if these duplicated tokens were ever consumed.
Experts Taylor (for EEC) and Mngomezulu (for MTN) agreed that systems failure regarding these retries was the probable cause of the discrepancies.
Judge Heher ruled that the proper interpretation of the MOA favored MTN’s position. The award noted that the agreement's purpose was to provide electricity access to consumers, with MTN acting as a facilitator or intermediary.
The arbitrator highlighted that the MOA did not entitle MTN to receive or hold the purchase price paid by the consumer; rather, MTN received a commission. Clause 6.3 of the agreement stipulated that purchases were to be paid for by the consumer via a Mobile Money collections account.
Justice Heher concluded that the sale of a token was not a discrete transaction ending with delivery to MTN. Instead, the resale agreement was no more than a cog which cannot achieve fulfilment unless the wheel which it serves turns full circle.
The arbitrator found that it was a term of the agreement that no sale was complete until the purchasing customer’s e-wallet was debited and the EEC collections account credited in real-time. He also found that the EEC would look to the customer, not MTN, as the source of payment.
Because EEC failed to prove that MTN had resold the tokens accounting for the discrepancy, or that customers had paid for them, the first claim was dismissed.
EEC also sought a statement and debatement of account regarding MTN's performance under the MOA. Judge Heher dismissed this claim, noting that the system was designed to be automated and transparent, providing EEC with internet access to the collections account. The arbitrator found no evidence that the parties intended for MTN to account for its administration of the collection account beyond the automated system.
In the final order, the arbitrator dismissed EEC’s claims but ordered MTN to pay the admitted sum of E864 648.
Regarding legal costs, the EEC was ordered to pay the costs of the arbitration incurred after the date of the tender (January 29, 2020). MTN was awarded wasted costs for the postponement of the hearing from December 13 to 17, 2021. EEC was awarded wasted costs for the postponement on May 12 and 13, 2022, due to MTN's late filing of expert reports.
MTN Eswatini Limited has filed an urgent application with the High Court of Eswatini seeking to enforce an arbitration award dismissing Eswatini Electricity Company Limited’s claim of over E10 million.